Limitation periods - Personal injury claims

Stephen Cain v Bernice Francis: Shona Mckay v (1) Stephen Hamlani (2) Direct Line Insurance Plc: CA (Civ Div) (Sir Robert Andrew Morritt, Lady Justice Smith, Lord Justice Maurice Kay): 18 December 2008

The court was required to determine in conjoined appeals in personal injury claims issues arising out of the application of section 33 of the Limitation Act 1980.

The appellant in the first appeal (C), and respondent in the second appeal (M) had been injured in road traffic accidents and liability had been admitted. In both cases, through the fault of their solicitors, proceedings had been issued outside the primary limitation period and limitation defences had been raised. The issue had been whether the court should exercise its discretion under section 33 to disapply the time limits, and in exercising that discretion, the effect of any prejudice to the respective defendants if they lost the opportunity to rely on the defence. In C’s case the delay was one day. The judge held that the defendant, the respondent in the first appeal, would be prejudiced by the loss of the limitation defence and he refused to disapply the limitation period. In M’s case the delay was one year. The judge held that he should ignore any prejudice to the defendants, the appellants in the second appeal, from the loss of the ‘windfall’ of the defence, and he disapplied the time limits.

Held: (1) There should be consistency of approach between judges on an issue as fundamental as whether the loss of a limitation defence amounted to real prejudice where the defendant had no defence to liability on the merits. There was now a long line of authority to support the proposition that, in a case where the defendant had had early notice of the claim, the accrual of a limitation defence should be regarded as a windfall and the prospect of its loss, by the exercise of the section 33 discretion, should be regarded as either no prejudice at all, as in the case of Firman v Ellis (1978) QB 886 CA (Civ Div), or only a slight degree of prejudice, as in the case of Donovan v Gwentoys Ltd (1990) 1 WLR 472 HL, Firman, Thompson v Brown (t/a George Albert Brown (Builders) & Co) (1981) 1 WLR 744 HL, Hartley v Birmingham City Council (1992) 1 WLR 968 CA (Civ Div), Gwentoys and Horton v Sadler (2006) UKHL 27, (2007) 1 AC 307 applied. However, all the authorities had arrived at the same result but by different reasoning, and it was helpful to advance some rational explanation for the authorities. Whether it would be equitable, meaning fair and just, to allow an action to proceed was at the heart of section 33. In fairness and justice, a tortfeasor only deserved to have his obligation to pay damages removed if the passage of time had significantly diminished his opportunity to defend himself on liability and/or quantum. The disapplication of the limitation period, which would restore his obligation to pay damages, was only prejudicial to him if his right to a fair opportunity to defend himself had been compromised. Although on a literal construction of section 33, it appeared to be relevant to the exercise of the discretion that the defendant would suffer the financial prejudice of having to pay damages if the arbitrary time limit were to be disapplied, Parliament cannot have intended that the financial prejudice, as such, should be taken into account. If having to pay the damages was not a relevant prejudice under section 33, it could not be relevant either as one of the circumstances of the case. Any prejudice to the claimant in being prevented from proceeding with his claim would be greatly reduced if he had a good claim against his solicitor. In a case where the defendant had suffered some forensic or procedural prejudice that would diminish his ability to defend himself, it would be relevant to consider that the claimant had another remedy. But the fact that the claimant has a possible claim against his solicitor would not necessarily mean that the time limit should not be disapplied. The basic question to be asked was whether it was fair and just in all the circumstances to expect the defendant to meet the claim on the merits, notwithstanding the delay in commencement. The length of the delay, of itself, was not a deciding factor. It was whether the defendant had suffered any evidential or other forensic prejudice which should make the difference. The reason for the delay might be relevant. Although the delay referred to in section 33 was delay after the expiry of the limitation period, it would also be relevant to consider when the defendant knew that a claim was to be made against him and the opportunities he had had to investigate the claim and collect evidence.

(2) Applying those principles, C’s appeal was allowed, D's appeal was dismissed.

Judgment accordingly.

Richard Methuen QC (instructed by Beardsells) for Cain; Frank Burton QC (instructed by Cogent) for Francis; Joseph O'Brien (instructed by Browell Smith) for McKay; Frank Burton QC, Anesh Pema (instructed by Cogent) for Hamlani and Direct Line Insurance Plc.

Real property

Adverse possession – Estoppel – Squatters

St Pancras & Humanist Housing Association Ltd v Allan Christian Leonard: CA (Civ Div) (Lords Justice Lawrence Collins, Goldring, Sir William Aldous): 17 December 2008

The appellant (L) appealed against a decision that, while he had established 12 years’ adverse possession of a garage owned by the respondent housing association (S), he was estopped from contending he was entitled to possession. S cross-appealed against the decision that L had established adverse possession.

L and other squatters had moved into two properties and, in 1975, L broke into a garage at the rear of one of the properties and took possession. L and others subsequently formed an association and purchased a lease of the properties from a local authority. The garage was not originally included in that lease but, some years later, a long lease was granted to the association. The association subsequently transferred its engagements to S, which subsequently issued proceedings for possession of the garage.

The judge held that, while L had established 12 years’ adverse possession of the garage, he was estopped from contending he was entitled to possession, as he had created the impression that the garage was communal property. The judge held that, at the management meetings of the association, L, who was a member of the management committee, had given no impression that he was claiming anything which would conflict with their getting a lease in the property. She further held that, as L had made no representation about his rights, the main requirement for a proprietary estoppel had not been made out. L contended that the judge had failed to take account of the fact he had no knowledge of the law of adverse possession nor that he had a proprietary claim to the garage and, therefore, there was nothing unconscionable in his actions during the period he was a member of the management committee.

Held: (1) The judge clearly had in mind that L had not become aware of his potential right to ownership having regard to adverse possession until, at the earliest, 2006. However, she found that L had a focused intention with regard to the garage because of his own desire to use and possess it. He was seeking to further his own particular interest insofar as he could, rather than any commercial interest. The judge was satisfied that L had the necessary intention to occupy the garage to the exclusion of other persons. He had believed he had the right to use the garage and believed that right would continue after the association acquired a lease. Despite that, he encouraged the association to enter into negotiations with the local authority on the basis that the garage would become leasehold property with the obvious consequence that it would be available communally. Accordingly, the judge came to the right decision for the right reasons.

(2) The judge had not erred in law when holding that L had established 12 years’ adverse possession.

Appeal dismissed, cross-appeal ­dismissed.

Stephen Jourdan (instructed by Dewar Hogan) for the appellant; Nicholas Grundy (instructed by Batchelors) for the respondent.